RP Data’s Cameron Kusher has produced an interesting post this afternoon on Australian housing values in the wake of today’s March quarter CPI release from the ABS:
Over the 12 months to March 2014, combined capital city home values have increased by 10.6% however, when you adjust for inflation the rise has been a lower 7.5%. Across each city the rate of capital growth over the year is somewhat lower when you adjust for inflation and markets such as Hobart and Canberra which have recorded low levels of value growth have actually recorded value falls.
Home values across the combined capital cities are currently 7.2% higher than their previous peak according to the RP Data-Rismark Home Value Index. However, as mentioned above, when values are adjusted for inflation the story is quite different with values -1.8% lower. Across every capital city except for Sydney home values are lower than their previous peak in inflation adjusted terms.
RP Data’s assertion that Australian housing values are nearing their former peak in real inflation-adjusted terms is supported by the RBA’s dwelling assets data, which was around 5% below its 2010 peak when measured against GDP as at December 2013 (see next chart).
Advertisement
Given current momentum, it is highly likely that Australian housing will hit peak valuation sometime this year.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
